Common GST Mistakes
The GST was introduced on 1 July 2000, yet there are many errors and omissions being made by small businesses on their GST returns. SB Bookkeeping ensures all transactions are correctly categorized. Below are some of the more common GST mistakes:
- 1. Bank Fees are treated as input taxed meaning the bank does not charge GST to the customer. Note, GST is charged on credit card merchant fees and therefore a GST credit can be claimed on these expenses.
- 2. Expenses relating to residential rental properties are not claimable even if the entity is registered for GST.
- 3. Business insurance policy has stamp duty component in the premium which is not subject to GST, a GST credit cannot be claimed on this portion of the payment.
- 4. GST-free purchases such as basic food items, exports and some health services doesn’t have GST in it so should not be claimed,
- 5. Wages and superannuation payments are non-taxable supplies,
- 6. Entertainment expenses where the business has elected to use the 50/50 split method for fringe benefits tax purposes. Only 50% of the GST credits can be claimed in this situation,
- 7. Motor Vehicles with a purchase price in excess of the luxury car limit of $57,466 GST inclusive. The maximum GST credit that can be claimed is limited to $5,224.
- 8. Sole traders and partnerships not allocating input tax credits and making adjustments to expenditure that is partly private and partly business use.
- 9. Yellow Pages advertising are accessible where the business chooses to pay for the cost of advertising by installments, the entire GST is charged up-front.
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